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EHR Incentives from the Government Set to Top $10B by End of Year

If there is any question in your mind that selling EHRs, with a major infusion of cash from Uncle Sugar, is now very big business? If not, perhaps a recent article about the size of EHR incentives will change your opinion (see: EHR incentives top $9B; Expected to reach $10B by year's end). Below is an excerpt from it:

Medicare and Medicaid electronic health record incentive payments are estimated to have reached $9.245 billion to 177,100 physicians and hospitals through November since the program’s inception and are anticipated to reach $10 billion by the end of the year. The Centers for Medicare and Medicaid Services will post final figures later this month as it captures more data. During November, CMS estimated that paid 8,250 Medicare eligible physicians $150 million and 4,000 Medicaid physicians $73 million and hospitals under either of the programs $645 million, for a total of $868 million, according to Robert Anthony, a specialist in CMS’ Office of eHealth Standards and Services. [See also: More voices raised against EHR incentives].....Many providers, especially hospitals, will attest and get paid in the final months of this year and early months of next year so they can be counted for 2012.“The incentive payments were almost $1 billion more in November. We are on track for the end of December to hit the $10 billion mark for EHR incentives”.... In October, the totals were $8.4 billion paid since the program’s start to 164,593 Medicare and Medicaid providers. Each month, the percent of provider involvement in meaningful use steadily rises....[See also: Government EHR incentives near $7B].

All of this prompts a single question in my mind. Pathology and radiology departments have both reached nearly 100% market penetration for LIS, RIS, and PACS deployment without any governmental incentives. One of the reasons for this success is that these systems are generally reasonably priced and result in a compelling ROI and huge efficiency gains for pathologists and radiologists. Such diagnostic departments could not possibly operate in today's environment without sophisticated IT support.

Why is it the case that hospitals need billions of dollar of federal incentives to deploy EHRs with the government linking such payments to meaningful use (MU) criteria that dictate performance criteria for the these systems. Are the systems not that good, are the EHRs overpriced, or do hospital executives and physicians have difficulty understanding the value of sophisticated IT? Is there any other industry in the U.S. outside of healthcare, excluding medical diagnostic services, where the government needs to cajole executives to invest in IT with financial incentives?